Unemployment or underemployment ranks as the biggest risk to
business in Kenya today, a new survey among executives revealed, turning
the spotlight on the country’s training programmes and job skill gaps.
Although
the Kenya National Bureau of Statistics (KNBS) in March this year
claimed that the country’s unemployment rate declined steadily over the
past 10 years to stand at 7.4 per cent at the end of 2016, placing the
country among those with the lowest unemployment rates-- business
leaders think otherwise and warn than joblessness poses a big threat to
the economy.
The concern by the business CEOs in Kenya
mirrors that of their counterparts globally and in the sub-Saharan
Africa (SSA) region interviewed by the World Economic Forum.
“Of
the 34 countries in sub-Saharan Africa that we surveyed, unemployment
and underemployment was identified as the most pressing concern for
businesses in 22 of them. No other region recorded anything like this
level of consensus among respondents, highlighting the profound
challenges that the region faces on this issue, particularly in light of
the demographic changes that lie ahead” the forum said in a new report
for 2018.
The UN projects that the working-age
population of Africa will more than double to 1.6 billion by 2050-- a
trend that could open new economic opportunities for the continent, but
only if jobs can be created in huge quantities.
According
to World Bank data, Africa’s official unemployment rate is just 7.3 per
cent. However, this figure masks deep-seated problems. More than 70 per
cent of the region’s workers are in vulnerable employment – compared to
a global average of 46 per cent – and 37 per cent are in extreme
working poverty, which is defined by the International Labour
Organisation(ILO) as income of less than $1.90 per day.
Executives
in Kenya listed terrorist attacks the second biggest threat to
business. Terror remains a threat in Kenya although the country has
taken major strides to limit it, including deploying its troops in
neighbouring Somalia where the Al-Qaeda linked al-Shabaab militant group
remains active. Kenyan troops are battling al-Shabaab in Somalia as
part of an African Union (AU) peacekeeping force that has been deployed
there for more than a decade.
The Kenya-based wing of Al-Shabaab, known as Al-Hijra, was in
July this year added to the US list of groups it regards as terrorist
organisations.
Cyber-attacks were ranked the third
highest concern among business executives in Kenya—reflecting a trend
globally where businesses have become wary of the huge disruptions
caused by such acts. Kenya’s relatively high internet connectivity, with
a penetration of more than 80 per cent, as well as high internet
traffic from mobile devices has made it a target of cyber-attacks.
A
number of massive cyber-attacks took place in 2017 — notably WannaCry,
Petya and NotPetya – causing extensive operational disruption and
financial losses for organisations around the world.
Failure
of regional and global governance was ranked the fourth biggest
business risk by executives in Kenya. Kenya has over the years borne the
brunt of failed governance in several neighbouring nations such as
South Sudan and Somalia which led to an inflow of refugees escaping
violence back at home. Apart from putting strain on resources in Kenya,
conflict in these countries have been blamed for the inflow of illegal
firearms into Kenya resulting in increased insecurity.
The
country’s systematic food crises was tiered as the fifth biggest threat
to business in Kenya-- highlighting the continuing challenge of meeting
basic needs against a backdrop of, among other things, drought, rising
food prices, poor planning and the strains of rapid urbanisation.
Only
last year, Kenya suffered a massive shortage of maize due to a
prolonged drought that affected farming in key producing areas forcing
the country to make huge and costly imports to cover for the shortfall.
Kenya’s
food imports in the first four months of the year grew by a third to
Sh68.63 billion compared to a year earlier, data by the Central Bank of
Kenya(CBK) showed, reflecting the country’s strain on sourcing food from
foreign markets.
The country is however projecting a
record harvest of maize in 2018 on favourable weather. Kenya is expected
to net 46.1 million bags of maize this year, according to estimates by
Egerton University’s Tegemeo Institute.
Globally, the
top-ranked risk across the world in 2018 was “unemployment or
underemployment”, with “failure of national governance” in second
position.
“The unemployment risk, in particular, needs
to be cautiously interpreted, as it may reflect quite different
challenges across countries and regions, such as weak growth, talent
shortages or labour-market disruptions caused by automation” the WEF
said.
“Regardless of these interpretative details, the
fact that unemployment and governance failures top the list of global
business risks should ring alarm bells about the strains on our basic
political and economic systems” it added. The WEF said another prominent
finding of this year’s survey is a jump in cyber-attacks, from eighth
position according to last year’s data to fifth position this year.
“We
will look back at 2017 as the year that the world began to take
seriously the potential extent of our vulnerability to cyber-attack
disruptions. In our survey, “cyber-attacks” tended to be flagged as a
concern in the world’s more advanced economies” it said. Of the 19
countries that ranked cyber-attacks number one, 14 were from Europe and
North America, the WEF survey showed. The others were India, Indonesia,
Japan, Singapore and the United Arab Emirates. By contrast, of the 34
countries that ranked “unemployment or underemployment” first, 22 were
from sub-Saharan Africa.
Ten years on from the start of
the global crisis, financial risks slipped in the global rankings.
“Fiscal crises” dipped from second place in last year’s Executive
Opinion Survey to fourth place this year, and “failure of financial
mechanism or institution” dropped from sixth to seventh.
“There
were regional exceptions to this trend, such as “asset bubbles” jumping
to second place in Europe, but overall the results of this survey do
little to counter worries about economic and financial complacency that
we voiced earlier this year in The Global Risks Report 2018” the WEF
stated.
Geopolitical concerns were relatively muted,
with “failure of regional and global governance” and “terrorist attacks”
in ninth and tenth places globally, respectively. The starkest of
geopolitical risks, “interstate conflict”, was ranked in the top three
risks in 17 countries.
Most of these countries were in
Eastern Europe and Eurasia, a pattern that reflects the increasing
importance of that part of the world as global geopolitical balances are
recalibrated. Environmental concerns did not make it into respondents’
global top 10 risks, in sharp contrast to recent editions of The Global
Risks Report, where environmental risks have been increasingly
predominant.
“This reflects the specifically
business-focused framing of the risk-related question in the Executive
Opinion Survey and also highlights the need for a diverse range of
perspectives on which global risks are most pressing” the WEF further
said.
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